Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-90
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CONSOLIDATED GROUPS
Subsection (3) applies if:
(a) an entity (the joining entity ) becomes a *subsidiary member of a *consolidated group at a time (the joining time ); and
(b) another entity (the disposing entity ) ceased to hold *membership interests in the joining entity during the period that:
(c) a *CGT event happened because the disposing entity ceased to hold the membership interests; and
(d) either:
(e) section 701-10 (cost to head company of assets of joining entity) applies to the joining entity ' s assets in respect of the joining entity becoming a subsidiary member of the group (disregarding subsection (3) of this section); and
(f) it is reasonable to conclude that, throughout the period mentioned in paragraph (b), the sum of the *total participation interests held by an entity (the control entity ) and its *associates in the joining entity was 50% or more; and
(g) in a case where the control entity is not the disposing entity - it is reasonable to conclude that the sum of the total participation interests held by the control entity and its associates in the disposing entity was 50% or more at the time the CGT event happened.
For the purposes of paragraphs (1)(f) and (g), in working out the sum of the *total participation interests held by the control entity and its *associates in another entity, take into account:
(a) a particular *direct participation interest; or
(b) a particular *indirect participation interest;
The following provisions do not apply to the joining entity ' s assets in respect of the joining entity becoming a *subsidiary member of the group:
(a) section 701-10 (cost to head company of assets of joining entity);
(b) subsection 701-35(4) (setting value of trading stock at tax-neutral amount);
(c) subsection 701-35(5) (setting value of registered emissions unit at tax-neutral amount).
Subsection (5) applies if:
(a) an entity (the higher level entity ) holds *membership interests in the joining entity (whether directly or through one or more interposed entities) at a time during the period mentioned in paragraph (1)(b); and
(b) the higher level entity becomes a *subsidiary member of the *consolidated group at the joining time; and
(c) the requirement in paragraph (1)(b) is not satisfied (disregarding subsection (5)); and
(d) the requirement in paragraph (1)(b) would be satisfied if the reference in paragraph (1)(b) to membership interests in the joining entity included a reference to membership interests in the higher level entity. 716-440(5)
Treat the reference in paragraph (1)(b) to *membership interests in the joining entity as including a reference to membership interests in the higher level entity.
Division 716
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Miscellaneous special rules
Subdivision 716-S
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Miscellaneous consequences of tax cost setting
SECTION 716-440
Membership interests in joining entity not subject to CGT under Division 855
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foreign entity ceasing to hold interests
716-440(1)
Subsection (3) applies if:
(a) an entity (the joining entity ) becomes a *subsidiary member of a *consolidated group at a time (the joining time ); and
(b) another entity (the disposing entity ) ceased to hold *membership interests in the joining entity during the period that:
(i) started 12 months before the joining time; and
(ii) ended immediately after the joining time; and
(c) a *CGT event happened because the disposing entity ceased to hold the membership interests; and
(d) either:
(i) a *capital gain or *capital loss of the disposing entity from the CGT event was disregarded because of the operation of Division 855 ; or
(ii) if there had been a capital gain or capital loss of the disposing entity from the CGT event, the capital gain or capital loss would have been disregarded because of the operation of Division 855 ; and
(e) section 701-10 (cost to head company of assets of joining entity) applies to the joining entity ' s assets in respect of the joining entity becoming a subsidiary member of the group (disregarding subsection (3) of this section); and
(f) it is reasonable to conclude that, throughout the period mentioned in paragraph (b), the sum of the *total participation interests held by an entity (the control entity ) and its *associates in the joining entity was 50% or more; and
(g) in a case where the control entity is not the disposing entity - it is reasonable to conclude that the sum of the total participation interests held by the control entity and its associates in the disposing entity was 50% or more at the time the CGT event happened.
716-440(2)
For the purposes of paragraphs (1)(f) and (g), in working out the sum of the *total participation interests held by the control entity and its *associates in another entity, take into account:
(a) a particular *direct participation interest; or
(b) a particular *indirect participation interest;
held in the other entity only once if it would otherwise be counted more than once because the entity holding it is an associate of the control entity.
716-440(3)The following provisions do not apply to the joining entity ' s assets in respect of the joining entity becoming a *subsidiary member of the group:
(a) section 701-10 (cost to head company of assets of joining entity);
(b) subsection 701-35(4) (setting value of trading stock at tax-neutral amount);
(c) subsection 701-35(5) (setting value of registered emissions unit at tax-neutral amount).
Note:
This subsection does not affect the application of subsection 701-1(1) (the single entity rule).
716-440(4)Subsection (5) applies if:
(a) an entity (the higher level entity ) holds *membership interests in the joining entity (whether directly or through one or more interposed entities) at a time during the period mentioned in paragraph (1)(b); and
(b) the higher level entity becomes a *subsidiary member of the *consolidated group at the joining time; and
(c) the requirement in paragraph (1)(b) is not satisfied (disregarding subsection (5)); and
(d) the requirement in paragraph (1)(b) would be satisfied if the reference in paragraph (1)(b) to membership interests in the joining entity included a reference to membership interests in the higher level entity. 716-440(5)
Treat the reference in paragraph (1)(b) to *membership interests in the joining entity as including a reference to membership interests in the higher level entity.
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